Did the Congressional Grilling of Big Tech Executives Actually Matter?

Maybe. After all the shouting and posturing on both sides, the final result had little to do with the questions and answers during a July hearing and a lot do with who wins the US election in November.

Because that will determine whether the US government will finally turn the full might and power of its regulatory apparatus on tech - or not, which would then signal to the rest of the world that big tech is fair game - or not. JL

Tony Romm and Cat Zakrzewski report in the Washington Post:

The leaders of Amazon, Apple, Facebook and Google took a brutal political lashing as Democrats and Republicans confronted the executives for wielding their market power to crush competitors, amass data, customers and sky-high profits. But the companies’ antitrust scrutiny may get worse. “They’re engaged in behavior that’s anticompetitive, which favors their own products and services, monetizes and weaponizes data, compromises the privacy of their users and creates a competitive disadvantage for companies attempting to enter the marketplace.”

Romm The leaders of Amazon, Apple, Facebook and Google took a brutal political lashing Wednesday as Democrats and Republicans confronted the executives for wielding their market power to crush competitors and amass data, customers and sky-high profits.

The rare interrogation played out over the course of a nearly six-hour hearing, with lawmakers on the House’s top antitrust subcommittee coming armed with millions of documents, hundreds of hours of interviews and in some cases the once-private messages of Silicon Valley’s elite chiefs. They said it showed some in the tech sector had become too big and powerful, threatening rivals, consumers and, in some cases, even democracy itself.

“Our founders would not bow before a king. Nor should we bow before the emperors of the online economy,” said Rep. David N. Cicilline (D-R.I.).

Cicilline, the chairman of the antitrust panel, opened a congressional investigation of Amazon, Apple, Facebook and Google last year, aiming to explore whether the tech industry’s most influential quartet of companies had attained their status through potentially anti-competitive means. In response, the four chief executives — Amazon’s Jeff Bezos, Apple’s Tim Cook, Facebook’s Mark Zuckerberg and Google’s Sundar Pichai — took the witness stand to fiercely defend their businesses Wednesday as rags-to-riches success stories, made possible only through American ingenuity and the sustained support of their ever-growing customer bases.

But lawmakers repeatedly presented a different vision at their hearing, one in which Silicon Valley’s myriad advancements in commerce, consumer electronics, communication and a vast array of online services had come at an immense cost to the people who use those tools and the companies that seek to compete against the tech giants.

In exchanges likely to have lasting resonance, Democrats repeatedly confronted Facebook’s Zuckerberg with his own past emails. Rep. Jerrold Nadler (D-N.Y.), the top lawmaker on the House Judiciary Committee, brought up a 2012 message in which Zuckerberg apparently said he sought to acquire Instagram, which at the time was a rival photo-sharing app, out of fear that it could “meaningfully hurt us.” Later, Rep. Joe Neguse (D-Colo.) pointed to other Facebook communications that described the company’s acquisition strategy generally as “a land grab.”

“Mergers and acquisitions that buy off potential competitive threats violate the antitrust laws,” Nadler charged. “In your own words, you purchased Instagram to neutralize a competitive threat.”

“We compete hard. We compete fairly. We try to be the best,” Zuckerberg said earlier in the hearing.

Amazon, meanwhile, faced withering scrutiny over allegations it may have misled the committee. The e-commerce giant previously told lawmakers it does not tap data from third-party sellers to boost sales of its own products. But Democratic Rep. Pramila Jayapal (Wash.) brought up public reports that indicated to the contrary, prompting Bezos — delivering his first-ever testimony to Congress — to offer a striking admission of potential fault.

“What I can tell you is we have a policy against using seller-specific data to aid our private label business,” he said. “But I can’t guarantee you that policy has never been violated.”

For all four executives, the afternoon offered an abundance of additional uncomfortable clashes, laying bare the broad, bipartisan frustrations with the way Silicon Valley puts users’ privacy at risk, polices content online and hurts competitors, including small businesses that have told lawmakers they cannot hope to compete with these tech giants. On several occasions, lawmakers cut off or talked over the tech executives when they offered vague or long answers, seeking to hold them to account for the evidence investigators had gathered from their probe.

Republicans, meanwhile, largely used their time during the hearing to attack some tech companies for engaging in perceived political censorship against conservatives, a charge that the industry vehemently denies.

“We all think the free market is great. We think competition is great. We love the fact that these are American companies,” said Rep. Jim Jordan (Ohio), the top Republican on the House Judiciary Committee. “But what’s not great is censoring people, censoring conservators and trying to impact elections. And if it doesn’t end, there has to be consequences.”

Despite scattered outbursts of political theater, the hearing could carry immense weight at a time when Amazon, Apple, Facebook and Google have lost support among both political parties — while also facing a slew of investigations around the world. In the United States, the Department of Justice may file an antitrust lawsuit against Google as soon as this summer, The Washington Post has previously reported, with cases against other companies potentially further on the horizon.

Cicilline, for his part, is expected to issue a report in August outlining the case for updating federal competition rules that would give regulators more power to probe and penalize the industry. The fruits of his investigation could offer Congress one of the first major actions it can take if it aims to rein in big tech.

The four companies’ leaders began Wednesday by raising their right hands and taking the customary oath to deliver truthful testimony from the west coast. Videoconferencing software helped beam the typically made-for-television moment into a sparsely attended, windowless congressional committee room thousands of miles away from the country’s tech heartland.

Each of the tech executives took great pains to stress their contributions to the U.S. economy. Amazon described itself as one of the most popular consumer brands, where consumers can get their goods quickly and cheaply. Apple said it had enabled a wildly popular ecosystem of apps and widely prized, high-end phones to match. Facebook said it had stood for free expression and speech against a rising tide of international censorship, pointing to new competitors including TikTok. And Google said its tools made it possible for people to find information and businesses worldwide to grow.

Quickly, though, Democrats on the House’s top antitrust committee sought to unspool the circumstances behind the four tech giants’ successes.

Some lawmakers specifically accused Google of weaponizing its popular search engine to put rivals at a disadvantage. Cicilline specifically charged Google had “stolen content to build your own business,” citing its practice of culling and displaying information at the top of users’ search results.

Google historically has said its approach to search helps people find the answers they need or the products they’re looking for. In the case of Yelp, though, Cicilline questioned Google’s motives, stressing the search giant had stolen its restaurant reviews and threatened to “delist” the site when it complained. Cicilline also accused Google of monitoring web traffic to “identify competitive threats.”

“Our documents show that Google evolved from a turnstile to the rest of the web to a walled garden that increasingly keeps users within its sights,” he said.

Pichai, for his part, disputed the characterization that Google had stolen content and put rivals at a disadvantage. “Today, we support 1.4 million small businesses supporting over $385 billion in their core economic activity,” he said. “We see many businesses thrive, particularly even during the pandemic.”

Cook, the head of Apple, received fewer questions than his counterparts. But several lawmakers peppered him with questions about the way the company handles its App Store — and the companies that have developed competing products or services that Apple also offers.

Some lawmakers repeatedly raised the company’s policy to take up to a 30 percent commission on in-app sales and subscriptions, a fee that has chafed prominent companies including Spotify, who fear they have no choice but to surrender critical revenue to Apple. The iPhone giant maintains the fee essentially funds the entire app ecosystem, and Cook at one point Wednesday told lawmakers the company has not raised its rates since it opened the store in 2008.

But lawmakers later produced a document showing one of Apple’s executives, Eddy Cue, in 2011 had proposed requiring developers to pay more. They posted it online, while in the hearing, Cook generally stressed Apple had no desire to harm developers.

“We do not retaliate or bully people,” he said. “It is strongly against our company culture.”

 Zakrzewski Top tech executives’ more than five-hour public lashing may be over. But the companies’ antitrust scrutiny may be about to get worse. 

That’s because lawmakers on the House Judiciary antitrust panel came heavily stocked with new evidence from their year-long investigation into the tech industry's power, which has amassed 1 million documents from the companies and hundreds of hours of interviews with industry insiders. 

Lawmakers unveiled executives' own words, recordings of conversations with small businesses and a trove of other evidence at the hearing to bolster accusations that tech companies squash their competitors.

Lawmakers used Facebook chief executive Mark Zuckerberg's own words against him.  Emails, chat records and video recordings – including some remarks and messages directly from Zuckerberg himself – were key to the committee's accusations that Facebook engaged in anti-competitive behavior. They accused the company of harvesting data about how its users behaved on other consumer apps, and then used that data to “copy, acquire, and kill” any rivals they notice have traction.  Jerrold Nadler, the New York Democrat who chairs the House Judiciary Committee, brought up a 2012 statements in which Zuckerberg apparently said he sought to acquire Instagram, which at the time was a rival photo-sharing app, out of fear that it could hurt Facebook.   Zuckerberg, in response, said: “By having them join us, they certainly went from being a competitor in the space of mobile cameras, to an app that we could continue to help grow and help get more people to be able to use and be on our team.” Zuckerberg argued it was far from obvious at the time of the acquisition that Instagram would reach the scale it had today.  But Nadler argued that if Facebook did snap up the company to neutralize a competitive threat, it would be against antitrust law. He pressed Zuckerberg on whether the company should be broken up.  The panel published text records revealing Instagram's co-founder worried Zuckerberg would go into “destroy mode” if he didn't sell.  Kevin Systrom's chat logs show he worried about how Facebook might retaliate if he decided not to sell after Zuckerberg expressed interest in buying the photo-sharing app in 2012.  "Will [Zuckerberg] go into destroy mode if I say no [to an acquisition deal]?" Systrom asked in a message to tech investor Matt Cohler, according to documents published by the committee.  “Probably,” replied Cohler, who had been an early Facebook employee. He warned that Facebook might target the app more aggressively if its leaders knew Instagram was raising more funding from venture capitalists.  These chat records were key to the interrogation by Rep. Pramila Jayapal (D-Wash.) of Zuckerberg, in which she pressed him on whether he copied competitors. Watch here:  Recordings of a merchant's struggles with Amazon highlighted the personal costs of tech's power. Rep. Lucy McBath (D-Ga.) sought to highlight the personal toll of the companies' policies when she confronted Amazon chief executive Jeff Bezos with a recording of a third-party seller who said she was restricted because she competed with the e-commerce giant in selling textbooks. The small business owner, in the recording played during the hearing, accused Amazon of systematically blocking her company from selling textbooks for months, after her business began to cut into Amazon's market share. She insisted the restrictions put her business and ability to feed her family in jeopardy, and that she heard no response when attempting to contact the company to get them lifted. (Bezos also owns the Washington Post).  Here's the exchange, captured by The Guardian: Bezos said it was not an acceptable way to treat a partner, but he wasn't aware of a specific case. “I appreciate that you showed me that anecdote, and I would like to talk to her,” Bezos said. “It does not at all, to me, seem like the right way to treat her.” Lawmakers sought to make the case that this was not a unique experience. “We have heard so many heartbreaking stories of small businesses who sunk significant time and resources into building a business and selling on Amazon, only to have Amazon poach their best-selling items and drive them out of business,” said David Cicilline (D-R.I.), who chairs the subcommittee that hosted the hearing.  Bezos also was also pressed by the committee on reports and supporting interviews by congressional investigators that found Amazon employees used data collected from third-party merchants to develop its own competing products. The e-commerce titan testified that he couldn't guarantee that the company didn't use proprietary data for this purpose, my colleague Jay Greene wrote. Bezos said the company had a policy against that practice, but it is currently investigating whether those rules had ever been violated.  Internal emails revealed an Apple executive considered hiking developer fees. Apple executive Eddy Cue once suggested raising the cut Apple would take from subscriptions to apps on its App Store to 40 percent, up from the 30 percent the company initially charged. The committee shared the finding on Twitter:  Cook insisted the company has never increased its commission fees, as lawmakers pressed him on whether the Apple App Store was too powerful and took too much of a tax from developers. But lawmakers questioned whether the company could do so in the future. Cook said that there was strong competition for app developers that would influence Apple's pricing.  Yet the document was key reveal because it highlighted that there has not always been a consensus about this issue among Apple's top leaders.  Witnesses are sworn-in before the House Judiciary committe. (Photo by MANDEL NGAN / POOL / AFP)  Google faced pressure for reversing previous assurances to Congress about a controversial merger. Rep. Val Demings (D-Fla.) grilled Sundar Pichai, the chief executive of Google and its parent company Alphabet, about the company’s practice of combining user data from its services with that from DoubleClick, an advertising company that the search giant acquired in 2007.  Google had previously told Congress it wouldn’t combine data, Demings said. But then the company did so in 2016. Pichai confirmed that he signed off on the decision.  “Practically, this decision meant that your company would now combine all of my data on Google, my search history, my information from Google maps, information from my email, my Gmail, as well as my personal identity with the record of almost all of the websites I visited,” Demings said. “That is absolutely staggering.” Democrats hope the hearing is just the beginning of a bigger antitrust crackdown. Cicilline accused all four companies of wielding monopoly power at the conclusion of his remarks, and he suggested some need to be broken up. He made clear a broader regulatory crackdown is coming for all of them.  That could start in about a month, when the committee is expected to issue a wide-ranging report on the findings of its investigation.  Cicilline told me after the hearing he thought the tech executives' testimony supported many of the findings of the lengthy investigation. “They’re engaged in behavior that’s anticompetitive, which favors their own products and services, which monetizes and weaponizes data, which compromises the privacy of their users and which creates a competitive disadvantage for companies attempting to enter the marketplace,” he said as reporters gathered around him on the Hill. It remains to be seen whether Republicans get on board with the Democrats' plans. Though the investigation began as a bipartisan endeavor, significant partisan divisions have broken out. The panel's top Republican, Jim Sensenbrenner (R-Wis.), said he didn't think it was time to overhaul antitrust laws, but rather to examine how the Federal Trade Commission and Justice Department are enforcing the rules already on the books.  Programming note: The Technology 202 will not publish on Friday, July 31. I’ll be on vacation next week, but the newsletter will be back in your inbox with a great lineup of guest hosts. Share The Technology 202

Our top tabs Republicans accused Facebook and Google of bias against conservatives. “I'll just cut to the chase. Big Tech is out to get conservatives,” Rep. Jim Jordan (Ohio), the top Republican on the House Judiciary Committee, said in his opening remarks. It was a major theme of the hearing as Republicans lobbed attacks against Facebook and Google for engaging in perceived political censorship against conservatives. The industry has vehemently denied such charges. Rep. Matt Gaetz (R-Fla.) asked Zuckerberg about specific incidents in which Facebook executives allegedly may have played down conservative viewpoints, Elizabeth Dwoskin reports. Gaetz asked whether content moderators and other employees were ever fired because of their policies. Gaetz cited documents from former right-leaning Facebook executive and Oculus creator Palmer Luckey that suggested the company asked him to suppress his political beliefs. Zuckerberg wouldn't comment on Luckey but said firing someone for political beliefs would be inappropriate.  Google CEO Sundar Pichai defended his company’s search tool against claims of bias against conservatives, Rachel Lerman reports. Rep. Greg Steube (R-Fla.) alleged that Google had removed a conservative site from the search results and only stored it before the hearing. Pichai said he would look into the specific issue but said, “We approach our work with a deep sense of responsibility in a nonpartisan way.” Steube also suggested that Google might intentionally mark conservative emails as spam. “There’s nothing in the algorithm which has anything to do with political ideology,” Pichai said. Democrats derided Republicans' allegations. Rep. Jaime Raskin (D-Md.) accused his conservative colleagues of having a “persecution complex." Pichai and Cook brought a strong "Rate My Room" game to the hearings.   Google CEO Sundar Pichai speaks via videoconference before the House Judiciary subcommittee on antitrust. (Graeme Jennings/Pool/Reuters) Both had plants that elevated their otherwise modest Web camera backgrounds, style columnist Robin Givhan writes. Zuckerberg on the other hand “looked as though he were delivering his testimony from the interior of a nuclear reactor.” But it was Pichai who won the best-dressed. Robin writes:  “Google’s Sundar Pichai was the sleekest of the lot in both appearance and setting. He wore an elegant charcoal suit and matching tie and was well-framed behind a desk that sat in an office that looked like it had been inspired by the West Elm catalogue. He sat with perfect posture, and when he spoke, his gestures were emotive but not frantic. He tended to steeple his fingers as he attempted to answer the House Judiciary subcommittee members’ meandering questions that teetered between privacy issues and conspiracy theories.” Givhan also captured some of the fireworks of the hearing that resulted from Jordan's outburst over alleged conservative bias: “So he started yelling again. And he was told to put on his mask. And, well, oh, boy, it was as childish as it all sounds, and one couldn’t help but wonder whether some of our representatives are drinking the hand sanitizer instead of using it for good hygiene.”  Tech companies skirted the truth about your data, The Post's tech columnist says. Facebook CEO Mark Zuckerberg speaks via video conference during a House Judiciary subcommittee hearing on antitrust on Capitol Hill on Wednesday, July 29, 2020, in Washington. (Graeme Jennings/Pool via AP) It's just one of the “big little lies” tech executives gave at the hearing, columnist Geoffrey A. Fowler says.  For instance, both Pichai and Zuckerberg claimed that users were in control of their data. When Demings questioned Pichai over the company’s decision to combine its existing trove of data with the data of another ad network it acquired, Pichai said consumers benefited from simpler control settings. But Geoffrey points out that more control settings don't always mean ones that are easy for consumers to use. And Pichai evaded the question of whether more data helped Google profit.   Cook also made the argument that Apple's iPhone gives users and developers more choice. But the company has also made it difficult for users to switch over to Android, Geoffrey notes.   Tech companies also argued that they aren't too big. Bezos rebutted monopoly allegations by pointing out Amazon makes up less than 4 percent of U.S. retail. But Amazon accounts for nearly 40 percent of online shopping, which has become ever more profitable during the pandemic, as Geoffrey notes. The bottom line: “It is effectively impossible to use the Internet without using in one way or another the services of these four companies,” Nadler said in his opening remarks.

The investigation could have an enduring impact on how the world regulates the tech industry. The revelations come at a critical moment, as tech companies face antitrust probes both in the United States and Europe – and U.S. lawmakers seek to overhaul existing antitrust laws they say are outdated and ill-equipped to rein in tech companies today.